Last Updated on: 7th November 2023, 12:34 pm
Over the last few years, businesses in Kenya and worldwide have not been doing so well. The economy has been bad for a while now, and people and businesses are finding it hard to survive. Also, sickness, change in customer behavior, change of career, etc., can make you consider selling a business in Kenya. However, no matter the cause of selling the business, you should not do so blindly.
This blog explains the steps tips to succeed in selling your business. This guide will highlight the dos and don’ts when you want to sell your business.
People who follow this guide end up selling their businesses at a reasonable amount, allowing them to gain something from their investments. Therefore, I recommend you implement everything in this blog post to succeed in selling your business investment.
Steps of Selling a Business in Kenya
Step 1: Assess your business
The first step of selling a business in Kenya is assessing its value. You can hire a professional assessor if it’s a big business. But if it’s just a small or medium enterprise, you can assess it yourself.
In the assessment process, you get the value of the stock and any other investment you’ve made in the business premises. For instance, you should factor in the cost of shelves, counters, point of sale, CCTV cameras, goodwill, and employees.
On the stock valuation, you can decide to value it at the purchase price or add a small margin. However, to sell your business faster, you can consider valuing the stock at cost price.
Step 2: Decide a price
After you’ve assessed the value of your business, you should settle at a price to sell your business. Don’t set too high or too low selling price as it can have different meanings to potential buyers.
For example, a high price tag can discourage potential buyers, while an extremely low price can show the buyers that you are hiding something about the bad.
Either way, you should not be too desperate to sell your business in Kenya to get good returns. At least, you should set a price that is fair to you and the potential buyer.
Step 3: Get your records straight
The new buyer wants to see how the business has been doing in the previous months or years. That’s why you should have all records ready to show the potential buyer of your business in Kenya.
You should have ready the purchases and sales records, profit and loss statements for around two or three years, business bank statements, tax clearance certificates, business permits, and the necessary licenses.
It would be great if these records don’t have anything to discourage the potential buyer from going forward with the purchase.
Step 4: Find a buyer
After you have everything about your business, the records and the selling price, you should start finding a reliable buyer. It’s a good idea to get someone who understands the business dynamics to avoid disappointments.
You can start to find buyers within your inner circle, such as friends, family, and colleagues. However, before you approach a buyer, you can do their background check to ensure they can pay your dues.
You should advertise your business to the right target audience willing to buy it. For instance, you can run a Facebook Ad for the sale. With the Ad, you can target a specific audience at a specific location. The narrowing will help you get more positive results from your Ad.
You can also sell your business through a broker. A broker will make it easy to find a buyer since they have connections in the industry.
Step 5: Negotiate terms
After you’ve got a potential buyer, you can meet to discuss terms and negotiate the terms of sale. At this point, you should have your records and an agreement form. You can also involve a lawyer to help you process the transfer.
Again, in this stage, you should discuss the payment terms, such as whether the buyer will pay fully at the closing of the deal or will pay in installments. In addition, you should also discuss the fate of your employees with your potential buyer
You should be keen enough to ensure that the new buyer successfully transfers the funds to your account.
The Do’s and Don’ts When Selling a Business in Kenya
Before selling a business in Kenya, there are some things you should avoid at all costs.
- Do not close the business.
When selling your business, ensure you have all business activities up and running. You must show the buyer they won’t have to revive the business.
- Don’t alert your employees.
If you make the mistake of alerting your employees, they may start finding other jobs, probably in the competitors, and that would hurt the new buyer of your business. You can make a deal with the new owner to maintain the best employees to keep the business running smoothly.
- Do not stop purchases.
Once the stock level reduces, you should add more stock to maintain the available customers. In addition, this will help you in case you decide not to sell the business.
- Disclose all issues with the business.
Before selling your business in Kenya, you should be comfortable disclosing all the problems and strengths of the business. This will help the potential buyer to ponder what to do with the information you provide them.
Selling a Business in Kenya: The Bottom Line
To sell your business in Kenya, you need to have all the documents before you find a buyer. You can really get returns by selling your business to the right buyer. Therefore, ensure you set everything straight from the start.
In addition, you can always leave room for a second thought in case you decide to stay in business. However, if you get a better deal that will save you from the stress, then take it,
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